Inditrade Capital Ltd Management Discussions

ECO nOM C i OvERviEw Global Economy the current year presents a dynamic and complex economic landscape. the year began with what appeared as bleak prospects for the global economy, with expectations of recession in the developed world following the war, creating inflationary pressures and subsequent monetary tightening by global central banks.the ImF currently projects global Gdp growth at 3.1%, a modest improvement from 2.7% in 2023. the ImF has raised Indias FY24 Gdp growth forecast to 7.8%, higher than the governments projection. Global inflation is anticipated to fall gradually to 5.8% in 2024 from 6.8% in 2023, yet it will remain above the long-term average of 3.9%. Geopolitical uncertainties leading the pace of geo-economic fragmentation will further accelerate in 2024. the global inflation outlook suggests that, while inflation is expected to moderate from the last years peak, the ongoing supply chain disruptions, the red Sea crisis, and potential energy shocks will remain headwinds. ndian Economy

India has consistently emerged as one of the fastest-growing major economies. despite global headwinds, India has reclaimed its position as a leader in global growth rates. Indias economy remains a beacon of relative resilience. domestic demand continues to be the primary driver of growth. Inflation is expected to gradually taper down to the Reserve

Bank of Indias target range of 4% to 6% by the end of the year. Indias equity markets have outperformed major global markets, reinstating the trust of global investors in the Indian market.

Capital MaRk Et REviEw

India has consistently outshined other major global equity markets across all investment horizons, ranging from one to twenty years.

Indian equities have offered the highest dollar returns for nearly all the seperiods, establishing India as a standout performer in the global equity landscape.the Indian capital markets play a crucial role in facilitating the transfer of funds from savers to borrowers and mobilizing savings. It provides a platform for investors to invest their savings in various securities and earn returns while corporations and governments gain access to the necessary capital to facilitate investment and promote growth.

The Indian equity market has undergone significant recoveryin earnings since the COVId-19 pandemic, with current valuationlevels approaching what is considered fair value. despitea vigorous market rally, this recovery in earnings justifiesthe current price levels, offering a balanced perspectivefor potential investors. the coherence between marketperformance and earnings growth not only boosts investorconfidence but also underscores the markets resilience and potential for sustained growth In addition to foreign inflows, strong participation is expected from domestic retail and institutional investors,who are likely to continue their substantial contributionsto the market. this domestic investment and favourable economic conditions augments the positive outlook for the Indian equity market.

COMpany REviEw the Company and its subsidiaries are engaged in lending to marginalized sectors of the economy. the businesses of microFinance, micro lending, and agri-Commodity Financing are focused on servicing the underserved in an impactful manner. enabling and empowering progress has been the motto of the Company and to take forward this spirit, the Companys insurance distribution business worked relentlessly and serviced its customers efficiently. Inditrade Scalerator facilitates availing of loans and financial services for underserved customers from any lending organisation, including but not restricted to Inditrade. Inditrade rural marketing, under its brand ‘Boonbox, works towards meeting the aspirations of customers in rural India by delivering consumer durables to their doorsteps and creating innovative financing structures through their third-party partners for such purchases.

OpERatiOnal REviEw Micro Finance the Company offers credit in rural and semi-urban areas through its subsidiary, Inditrade Microfinance Limited. It offers credit support to women entrepreneurs looking to start businesses and for their working capital requirements. Credit Information agencies, namely Equifax, CRIF

High mark, etc., enable ascertaining the borrowers credit-worthiness. to minimize the risk arising from client default, the Company restricts its exposure to a single client to up to rs.30,000 over an initial period of one year. It undertakes collection of the loan repayments on a fortnightly basis. the entire process, from collecting KYC information to the disbursement of the loans, is digitalized. the Company has a strong presence in the nine states having 158 branches. the Company has approximately 1,93,000 borrowers and disbursed an aggregate amount of more than rs.470 Cr across these states. agri Commodity Finance the Company provides funding primarily against exchange-traded non-essential commodities such as soya, pepper, cardamom, rubber, etc. the Company generally provides funding for a short duration, ranging from one to six months. Its clientele includes commodity buyers, traders, and those involved in processing. Credit risk is minimized by adhering to strict norms wherein the commodities are held as security are placed in recognized warehouses. Funds are provided against electronic or physical receipts from the warehouses. Also, it may require the borrowers to sell the goods in the futures markets within a time frame that mirrors the terms of the funding. to minimize the default risk, exposure is restricted to a single client. despite strict lending norms, the offerings are well-received due to attractive warehouse features like providing funds to the extent of around 95% against goods compared to bank funding of 70 – 80%, faster processing of funds at attractive rates, etc. the Companys stronghold on agri-commodity Financing remains in Southern and Central India, though it has successfully reached customers across all major commodity centers in the country. i nsurance Broking the Insurance Broking business is steadily progressing with a strong base in Kochi, Bangalore, and delhi, primarily catering to corporate customers. We provide a wide range of life, Health and General Insurance solutions from various insurance companies to many major corporates in the country. Our expansion plans include multiple locations covering northern and southern India to strengthen the business further. scalerator (iBog)

Scalerator was launched in 2020 with the objective of helping under-served customers avail themselves of loans and financial services from of lenders, the organized sector. Scalerator works with a diversified including Inditrade and also other financial services providers, facilitating business loans, personal loans, gold loans, healthcare loans, etc., to the customers. the Company has a strong presence across southern India and would seek to expand its presence in other parts of the country over a period of time. iBog is a completely digital platform and seeks to take financial services to remote parts of the country its operations to Micro

Rural Marketing (Boonbox) this business operates under the brand name Boonbox, which was launched in november 2020. Boonbox attempts to meet Bharats aspirations by bringing consumer durables and other relevant products to rural Indias doorstep. It uses innovative financial structures by working with a series of partners to arrange financing for customers. At present,

Boonbox operates in southern India.a spiring Bharats needs are further growing, and we envisage Boonbox rapidly scaling up during the next few years and expanding its business nationwide.

Financial Review

In FY 2023-24, the Companys total consolidated income (including other income) stood at rs. 177.44 Cr as against rs. 179.33vcr in FY 2022-23. the Companys revenues from operations are rs. 162.32 cr in FY 2023-24 as compared to rs. 167.68 cr in FY 2022-23.

The Profit before tax and exceptional items stood at Rs.6.74 Cr as compared to 6.47 cr in previous year. The Profit after tax stood at rs.2.92 Cr in FY 2023-24 as compared to rs. (20.33) Cr in FY 2022-23. the performance highlights of the major subsidiaries of the Company for FY 2023-24 were as follows: Inditrade Fincorp limited recorded a total revenue of rs. 42.37 cr as compared to Rs.47.96 cr in the previous year. The profit after tax was rs.13.66 as compared to rs. (1.40) cr in previous year.

Inditrade Microfinance Limited recorded a total revenue of Rs. 69.78 cr as compared to Rs. 42.96 in previous year. The profit after tax was rs.49.92 Cr as compared to rs. (20.16) in previous year.

Inditrade Business Consultants limited recorded revenue of rs. 10.37 Cr as compared to previous 26.08 Cr in the previous year. The profit after tax was rs. 0.07 as compared to rs. 3.14 cr in previous year.

Opportunities

Reviving rural market

Leveraging technology for enhanced productivity, efficiency, and transforming customer experience

Digitalisation and data-driven decision making threats

Rising inflation

Increasing geopolitical instability Increase in borrowing costs

Outlook the growth in nBFC –mFIs assets under management (aUm) of non-banking financial company-microfinance institutions (NBFC-MFIs) is expected to remain healthy given the buoyant demand. However, it is expected to moderate to 24-26% in FY 2024 and further to 23-25% in FY 2025 from the highs seen in FY 2023, according to ICra.

The Company has already diversified financial products distribution business through Scalerator, Boonbox and

Insurance Broking. the Company is always on the lookout for building partnerships with banks and other lending institutions.

Risk Review the Companys risk management approach focuses on risks that could affect our business performance. Our risk management strategy aims to evaluate risks constantly, assessing likelihood and impact to ensurethat the most critical risks to the Companyreceive the requisite focus and attention from our management team. the key risk areas such as economic risk, credit risk, asset-liability management risk, market risk, operational risk, compliance and regulatory risk, IT and cybersecurity risk, and attrition risk are identified periodically and addressed, and suitable mitigation measures, as may be appropriate, are initiated for resolving such matters. i nternal Control systems and their adequacy pursuant to the provisions of section 134(5)(e) of the Companies act, 2013, every listed company has to lay down Internal Financial Controls and ensure that these are adequate and are operating effectively. Internal

Finance Controls means the policies and procedures adopted by the Company to ensure the following:-

Orderly and efficient conduct of its business;

Adherence to the Companys policies;

Safeguarding of its assets;

Prevention and detection of frauds and errors; and

Accuracy and completeness of the accounting records and timely preparation of reliable financial information.

Inditrade has adequate and suitable internal control systems that are continuously monitored and updated to ensure that its assets are safeguarded and the internal control system is commensurate with the size of the business as well as the industry in which the Company and its subsidiaries operate.these systems also ensure established regulations are complied with and pending issues are promptly addressed. the adequacy of the internal control systems is audited by the independent internal auditors, and the reports are reviewed quarterly by the Audit

Committee. all new businesses are automatically included in the internal audit schedules and reviewed as per practice.

Human Capital this year, our journey in human resources was a story of transformation and innovation. as the business landscape evolved, so did our approach to managing and nurturing our most valuable asset – our people. this years chapter highlights our commitment to harnessing talent, fostering growth, and building a vibrant workplace where every individual thrives. the Challenge: at the beginning of year, we faced a rapidly changing environment marked by a growing business landscape, evolving workforce expectations, and a competitive talent market. Our mission was clear: to attract, develop, and retain the best talent while creating a dynamic and supportive work culture.

We have adopted and aligned the following Human Capital practices at Inditrade:

Discovering Hidden Gems

Cultivating Growth Through Learning

Navigating Performance and Recognition

Fostering a Thriving Community

Harnessing Talent: The Beacon of Our Success

As we reflect on the past year, our story is about empowerment, growth, and resilience. We have harnessed the talent within our organization to create a dynamic and supportive work environment where every employee can thrive. Our journey is far from over. With the lessons learned and the foundations laid, we are poised to continue this narrative, adapting to new challenges and opportunities with the same spirit of innovation and commitment. together, we are writing the next chapter of our story, where talent is not just managed but harnessed to drive our collective success. the Companys Human Capital headcount, including its group companies, is 1,108 as of31^stm arch, 2024. nformation technology

Information Technology (IT) is an integral part of the financial industry. the organization works on providing the best possible technological platforms for seamless transactions to end users. the approach, in turn, drives sustained business growth in an ever-evolving environment. the Company strives to provide the best service to its customers. the Company and its subsidiaries have adopted digital processes, to the maximum possible extent, for faster services and with minimum tat (turnaround time). the Company ensures prompt enhancement of its core applications. this enables it to satisfy business needs as well as customer expectations beforehand. the Companys constant efforts have secured the future growth of the business with improved system speed, performance, and response time, which has directly enhanced productivity, efficiency, and scalability.

Cautionary statement

Certain statements in the m anagement discussion and analysis describing the Companys objectives and predictions may be ‘forward-looking statements within the meaning of applicable laws and regulations. Actual results may vary significantly from the forward-looking statement contained in this document due to various risks and uncertainties. these risks and uncertainties include the effect of economic and political conditions in India, volatility in interest rates, new regulations and Government policies that may impact the Companys business as well as its ability to implement the strategy.